Leeham News and Analysis
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Pontifications: Don’t give Spirit a bailout
Commentary
By Scott Hamilton
April 19, 2026, © Leeham News: News broke on Friday that US ultra low cost carrier (ULCC) Spirit Airlines wants a few hundred million dollars from the federal government to save it from liquidation.
The reason: the price of jet fuel more than doubled since Feb. 28 when Donald Trump directed the military to bomb Iran. Trump didn’t ask Congress for authority to commence this war. Israel simultaneously undertook its own bombing.
Iran responded by bombing Israel and just about every other country in the Middle East, and by attacking a US aircraft carrier and unarmed oil tankers. The Strait of Hormuz was closed, cutting off the supply of about 20% of the global oil.
As someone who began his aviation career with the first Midway Airlines in Chicago in 1979, I have a natural affinity for low fare carriers. I support new airlines and for the most part, I oppose industry consolidation that results in making the mega-carriers even bigger and stronger.
That said, the US government shouldn’t bail out Spirit.
Like the clock striking 12, the Trump Administration blamed the Biden Administration for Spirit’s current plight. Biden’s Justice Department rejected a merger between JetBlue and Spirit on anti-trust grounds, concluding that the combination would be anti-consumer.
I opposed the merger when it was proposed in 2022. Spirit was such a basket case even then that I concluded Spirit would drag JetBlue into bankruptcy. Before the weekend, JetBlue’s founder, David Neeleman (who left the airline years ago) opined that JetBlue would be in bankruptcy before the end of this year. The airline was struggling in 2022, and it was struggling before the current Iran War began.
JetBlue raises $500m
However, JetBlue just raised $500m in a debt deal secured by 22 Airbus A320s. With more than $1bn in liquidity at the end of last year, depleted at a rate we’ll only know when its first quarter financials are announced on April 28, the carrier may be okay for now.
As for Spirit, over-expansion, over-commitments for too many aircraft, bad management, bad service and bad strategies don’t support saving this airline. It should shut down and liquidate, with healthy airlines picking up the pieces.
According to reports, other US ULCCs and low cost carriers, including Frontier and Avelo airlines, and a few more, may also turn to the federal government for bailouts. Some of these carriers might deserve support and some don’t. The proper procedure is for this to be debated in Congress. If these airlines deserve federal support, and it’s not at all clear to me that they do, then what about Alaska Air Group, American Airlines, Delta Air Lines, Southwest Airlines and United Airlines who likewise have been badly hurt by the same dramatic hikes in jet fuel? Delta and United officials already said that on an annualized basis, the fuel price hikes will more than double their best earnings.
As for American, it’s been so mismanaged in recent years that one must analyze whether it would be deserving of a federal bailout.
Previous crises
One advantage I have of being an old fud is that I’ve been around long enough to see four life-threatening crises for the US airline industry. Next year will be my 50th year as a journalist covering the commercial aviation sector, a consultant to it, or employed by it.
I was around for the 1991 Persian Gulf War that began after Iraq invaded Kuwait, driving oil prices up sharply. US airline after US airline fell into bankruptcy. Most went out of business, including my beloved Midway Airlines. Eastern Airlines and Pan Am, two storied names, ceased operations. At the peak, 40% of the US airline capacity operated in bankruptcy.
In 2001, terrorists hijacked four airplanes belonging to American and United. Two were flown into the World Trade Center in New York, one into the Pentagon, and the fourth was dived into the ground outside Shanksville (PA) when passengers tried to storm the cockpit to retake command of the aircraft. The federal government grounded the industry for four days while implementing emergency security measures. Passenger traffic tanked under the fear of more terrorist tactics targeting airlines.
The Great Recession of 2008 was another existential threat to the airlines. Finally, the 2020-2022 COVID pandemic shut down airlines for an extended period.
Federal bailouts
Going with the more recent crisis first, Congress approved emergency loans to the airlines in 2020 following the lockdown because of COVID. This was Congressional action, voted upon, approved and signed by the White House. More than $50bn was provided to the airlines.
The 2001 terrorist attacks resulted in the debated and approved Air Transportation Stabilization Board (ATSB). This legislation established strict requirements to qualify. Airlines with poor profit track records, like LCCs Vanguard Airlines and Air South (among others) were rejected. America West Airlines, also an LCC patterned after Southwest Airlines, also was rejected. After revising its business plan, the ATSB approved it.
Believe it or not, United Airlines, which had two of its airplanes involved in the 9/11 attacks, was rejected. The ATSB concluded that its recent financial history and its business plan didn’t meet the requirements for a government bailout. United filed for bankruptcy, reorganized and continued afterwards.
I recount this history in detail in my third book, due to be published in September, called 50 Years in Commercial Aviation, Memories and Inside Stories.
The market determined which airlines would live or die in the 1991 Gulf War and Great Recession crises.
If the federal government wants to consider providing federal money—taxpayer dollars—to the ULCC/LCC beggars, then in fairness, all airlines should be eligible. The dramatic spike in jet fuel prices affect them all, not just the ones with poor management and dodgy business models. Yes, the Trump Administration created this problem. But there shouldn’t be a knee-jerk solution.
The template is there with the 2001 ATSB. Dust it off, amend it if need be, and debate it in Congress. That’s the law of the land. Executive Action doesn’t follow the law.
Looks like Spirit’s average load factor has recently been ca. 78% — far too low for an LCC.
On some routes, it seems to be as low as 22%.
https://www.enginecowl.com/spirit-airlines-2025-result/
Some other recent LCC load factors, for reference:
AirAsia: 89%
Ryanair: 93%
Wizz: 90%
Notably: Breeze appears to be around 76%.
The spike in fuel prices and cost of living makes those airlines with cash/assets reserves and good banking relations survive. The weaker airlines aircrafts if modern will quickly find new operators when conditions stabilise until next crisis. Once can wonder if leasing companies money comes from banks “newly printed money” increasing the global stock of USD and how fast it can be allowed to grow as US politicians seems to be incapabale to raise income taxes. If Airbus will switch to require payment in € to match its major sources of parts for the aircraft.
“If the federal government wants to consider providing federal money—taxpayer dollars—to the ULCC/LCC beggars, then in fairness, all airlines should be eligible.”
YES! ALL airlines SHOULD be eligible, and if need be, they should all sue the Trump administration and Trump personally for full compensation for the costs imposed on them by Trump’s war of wimsy.
Trump, acting under orders from a foreign country, attacked Iran in an unprovoked war of aggression at a time when Iran was working in good faith to negotiate peace with the United States.
It didn’t take a geopolitical expert to realize that Iran would respond by closing down the Strait of Hormuz and by attacking the energy-producing infrastructure of every Gulf Arab state.
If Trump starts bombing Iran again, we could soon see the end of the Gulf Arab states and the end of three great airlines: Emirates, Qatar, and Etihad.
If Trump makes good on his threat of taking out Iran’s infrastructure, Iran will respond by taking out the desalination and energy plants of the UAE, Bahrain, Qatar, Kuwait, and Saudi Arabia. These countries cannot survive without desalination or air conditioning.
Soon, temperatures in the Persian Gulf will be over 120 degrees F. A city the size of Dubai cannot survive under these temperatures without A/C and fresh water. It will soon become a ghost town, as hard as that is to believe.
The United States is spending over a billion dollars a day to wage a war, not in American interests, but in the interest and behest of another country, in the interest of “America’s most cherished ally.”
If the Trump administration has billions to spend on an insane and illegal war, at the behest of a FOREIGN COUNTRY, it can spare a few billion to spare US airlines from bankruptcy and keep airline competition alive.
+1
It’s hard to feel too much sympathy for an airline that is barely solvent. My only consideration would be extended DIP financing if another airline were attempting to buy spirit.
This is an airline that already had one foot in the grave and the other on a banana peel.
Fuel went up across the board. If a couple airlines go under or the industry reduces capacity, it will survive, just at a smaller capacity with higher fares.
The aircraft will ultimately be deployed to other solvent airlines
And I might add that the the human capital, the employees of these airlines, have little to lose given the low pay for which these ULCC airlines are notorious. Their lives will be disrupted temporarily, but they will move on to other airlines eventually or out of the industry. Their investment is low.
Hmmm, the difference between a low Spirit salary and Spirit going out of business is unemployment.
I suppose that most Spirit employees would rather continue with Spirit – at least until they find a more rewarding airline to work for.
You also overlook that few airlines will be hiring at a time when fuel costs spike and a recession may be just around the corner.
Even if they were, the presumption ignore the fact of a seniority system in most airlines, which has new joiners start at the bottom, and that pilot licenses quickly loose value after an extended period of unemployment.
That is capitalism. Companies go out of business all the time without a government bailout.
Previous government bailouts have shown airlines blow through their government funds only to file for bankruptcy anyways. That is a very harsh sentiment…but bailing out Spirit is bailing out a failed airline. Fuel prices are just a crutch at this point. In all honesty the buyout from JetBlue should have been authorized. That is my opinion but it is two smaller airlines combining forces and would have had little meaningful effect on competition.
All the other airlines will be healthier for the reduced capacity.
Indeed, the airline industry has no concept of “journeyman” as far as worker salaries go. As you say, pay is based on length of service with a given carrier. It’s a regressive system which benefits the employer by tying an employee to a carrier. It’s a legacy of the airline industry history as a highly regulated industry. Portability of seniority for pay purposes through a journeyman system would help equalize workers across the industry. I’m under no illusions that will ever happen.
I agree that a catastrophic shutdown of an airline is traumatic and while it would be ideal for those employed at low paying airlines to find employment at a higher paying airline without going through that experience, it’s been my observation that those affected employees realize they gambled on a ULCC and it didn’t work out and they move on. Especially pilots, who have probably the most valuable skills of any airline staff, will, by and large, ultimately find better positions. Others with lesser skills will look to gain training in other careers or bid their time until a better airline opportunity appears.
Thomas, have you worked for an airline? If the pay is so “low” why would you suggest those pilots have not moved on to other carriers, considering the unprecedented hiring rates in recent years?
Chat GPT for Spirit Airlines current fleet
“Current fleet (early 2026)
About 110–120 aircraft in service
Some sources list totals up to ~130 aircraft including parked or transitioning planes
So right now, a good estimate is:
≈115 aircraft (active fleet)”
Chat GPT on Spirit Airlines current fleet mix
“Fleet mix (approx.)
A320-200: ~60+ aircraft
A320neo: ~15–20
A321-200: ~25–30
A321neo: ~20”
Chat GPT how old is Spirit Airlines fleet
“Bottom line
Average age: ~8 years
New planes: as young as 1–3 years
Older planes: around 10–12 years
Compared to many airlines (where fleets can average 12–15+ years), Spirit’s fleet is relatively young and modern.”
Good guess. According to Airfleets.net the average age of the Spirit fleet is 7.6 years… 9 years for A320 and 5.2 years for A321 with 125 active across both.
I don’t think this includes their almost 40 NEO aircraft grounded due to GTF issues.
https://www.airfleets.net/ageflotte/Spirit%20Airlines.htm
Long-established airlines are also experiencing alarming fuel-price-related pain:
“Lufthansa’s last 4 Airbus A340-600s will leave the fleet in October”
“In view of significantly increased kerosene prices, which have more than doubled compared to the period before the Iran war, an initial package has been approved that provides for a reduction of the flight program on short-, medium-, and long-haul routes, as well as measures for early fleet modernization.”
“As a first immediately effective step, the 27 operational aircraft of Lufthansa CityLine will be permanently removed from the flight program, in order to reduce further losses of the loss-making airline. The Canadair CRJ aircraft are nearing the end of their technical operational capability and have comparatively high operating costs.
“In the second step, long-haul capacity will be reduced by 6 intercontinental aircraft at the end of the summer flight schedule. The last 4 remaining Airbus A340-600s will leave the fleet in October, thus bringing the era of this aircraft type at Lufthansa to a definitive end. Additionally, two Boeing 747-400s will be grounded from October onwards for the coming winter. The final farewell to this aircraft type is planned for next year.
“In the 2026/27 winter flight schedule, the third step will take place with a reduction in the capacities of the Lufthansa core brand as part of the envisaged consolidation of short- and medium-haul traffic across six hubs of the Lufthansa Group. This additional capacity reduction corresponds to five aircraft of the Lufthansa core brand.
“The package of measures generates a disproportionate savings effect on fuel costs. On the one hand, particularly inefficient aircraft are being removed from flight operations early. On the other hand, the saved kerosene quantity reduces the unhedged portion of the Group’s fuel requirements.”
https://aeronewsglobal.com/lufthansas-last-4-airbus-a340-600s-will-leave-the-fleet-in-october/
> It’s also reported that executives from several low cost carriers are going to meet with Transportation Secretary Sean Duffy in the coming days, in a meeting that was reportedly requested by the Department of Transportation (DOT), to determine the financial health of smaller airlines.
8:44am
> 15 min ago, Trump threatened to destroy all electric power plants and bridges in Iran if they don’t accept his demands, the 3rd time he has made this threat. This will likely stiffen the back of IRCG. This is the Escalation Trap in real time
https://x.com/ProfessorPape/status/2045846070954012944
> (Reuters) – The world has lost over $50 billion worth of crude oil that has not been produced since the Iran war began nearly 50 days ago and the aftershock of the crisis will be felt for months and even years to come, according to analysts and Reuters calculations.
I’m curious if the USG provided any support to the airline industry after 9/11. This is what I found:
> the US government provided a massive financial rescue package to the airline industry immediately following the September 11, 2001, terrorist attacks to prevent the collapse of the commercial aviation system.
The 9/11 Airline Bailout Package
On September 22, 2001, President George W. Bush signed the Air Transportation Safety and System Stabilization Act. The key components of this package included:
$5 Billion in Direct Cash Assistance:
$10 Billion in Loan Guarantees: Authorized federal loan guarantees to help carriers obtain financing, managed by the newly created Air Transportation Stabilization Board (ATSB).
and other packages…
@Pedro, you might actually *read* my Pontifications to learn what the government did for the airlines, gor crying out loud.
Hamilton
First of all, today’s airline industry in the US is much more concentrated in a few big players, America West? No more. Air Tran? No more. Continental? No more. Northwest? Nope. US Airway? Nope. Hawaiian, or Virgin America? What we’re dealing with is what we have in 2026, not in 2001.
And I’m afraid Spirit, if it goes out of business, won’t be the last one. Hundreds of aircraft will be grounded, with jobs associated gone.
Actually Continental survives. It’s called United. United disappeared.
In other news, the UAE asked for financial package i.e. bailout? Lol.
> According to The Wall Street Journal, the United Arab Emirates is negotiating with U.S. officials for a potential financial lifeline…
@ Pedro
How the tables have turned.
Just last summer, during Trump’s visit to the Gulf, GCC countries were pledging trillions of dollars of investment in de US. But now, just 9 months later, they’ve started looking for financial support 🙈
The UAE would be better off turning to China for financing: the US already has too much debt, and extra borrowing at current rates is prohibitive.
Abalone
Paraphrased:
“You started this war; if we run short of USDs as a result of it, either you will give us USD swap lines, or we will be forced to start transacting oil and gas in CNY and other currencies.”
We have USD, all tied-up in UST and US equity, etc. We’ll dump those, pushing interest rates high, crash the market and start trading in petroyuan. Mid-term election coming in six months or so, will you be nice to me? The choice is yours, mr president.
The amount talking about here won’t be small, hundreds of billion? Compare to that, Spirit is no more than chump change. The optics don’t look good if Trump “bails out” a trillion dollar kingdom far away that isn’t shy from spending obscene amounts…
Crown Prince MBZ just paid Xi a visit, imagine what they talked about? It’s wise if they have a plan to fall back on before they talked with the US.
If they are going through some hard days ahead, realistically, how soon will they tell the airframers to provide financing for their aircraft?
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Does it mean the business model of ULCC doesn’t work anymore in a post-covid world?
In case another airline wants to acquire or merge with or pounce on JetBlue, should it be allowed? How to maintain fair competition in the market?
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When there’s a crisis, there’re opportunities:
> American’s last CEO made a carrier off of government bailouts – from securing one at America West, taking over US Airways which had just received one, and acting as the primary industry lobbyist for the $54 billion achieved during the pandemic. (https://viewfromthewing.com/spirit-airlines-is-asking-the-trump-administration-for-a-taxpayer-bailout-to-avoid-shutting-down/)
How likely will airline customers offload their 777X at favorable terms?
AI overview:
> Lessors have expressed significant skepticism regarding the marketability of the Boeing 777-9 (777X), primarily due to its size, market fragmentation, and prolonged certification delays, with some viewing it as a potential niche aircraft rather than a market standard
> Market Shift Away from Large Widebodies: The market has moved toward smaller, more efficient, and versatile twin-aisle jets, such as the Airbus A350-1000 and Boeing 787, rather than Very Large Aircraft (VLA) in the 400-seat range
> Concentrated Order Base: The 777X backlog is heavily concentrated among a few carriers—primarily Middle Eastern airlines (e.g., Emirates, Qatar, Etihad)… —rather than having a diverse customer base, making it less attractive for leasing company portfolios
> Declining Asset Value Concern: Some analysts believe that due to market changes since the 2013 launch, the 777-9 is too large for the current demand, risk reducing its long-term market value
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😅
> UAE retains Aa2 rating as Moody’s maintains stable outlook This review follows a March 6 2026 affirmation by S&P Global Ratings, which assigned the UAE an AA/A-1+ rating with a stable outlook
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If someone make a huge bet in the polymarket, then we’ll know which direction it’s going?
Deutch Bank likes to loan money to high risk enterprises… Sure there might be some strings attached, few favors, but it’s worked for some.
Consolidation nothing is new in the industry.
Long before 2001, probably before your time, carriers such as ValuJet, Kiwi international, RenoAir, even standout PeopleExpress,vied for control of the LCC segment.
After several well documented incidents,I have no issues with those Airlines being absorbed by legacy carriers or fading into oblivion.
Great article, Scott. Thank you.
More jet fuel news:
“Merz convenes Germany’s security council over looming jet fuel crunch”
“While admitting the current situation is “tense,” Merz said the country had sufficient access to the key fuels at the moment. But, he added, “if conditions worsen, we are prepared to act,” and insisted “all available instruments” would be used to ensure security of supply.
“Germany’s National Security Council, which is composed of key government ministers and sectoral experts, was set up last year to coordinate rapid responses to major threats. The decision to convene the group signals Berlin believes the jet fuel shortage could become a significant problem.”
https://www.politico.eu/article/friedrich-merz-germany-security-council-jet-fuel-shortage/
No way! Mrs. Reiche said that were would be enough fuel. How can the chancellor ignore such a useful source of disinformation?
I fully concur.
While I feel sorry for Spirit employees, it would be a travesty to prop up an airline that was heading into oblivion anyway while better managed competitors have to manage without such aid.
Sudden spikes in fuel price are hard to weather for all airlines, often preceding or coinciding with a recession where demand for air travel shrinks. It often defines a watershed that separates the wheat from the chaff.
Bailing out a failing airline that was already tanking before fuel costs spiked is clearly not the way to go.
And I say this as a one-time Pan Am employee.
Spirit Air is the BEST airline hands down!!
AI overview:
> If Spirit Airlines liquidates, the primary beneficiaries would be major U.S. carriers (Delta, United, American) and low-cost competitors (Frontier, Southwest). These airlines would gain Spirit’s market share, airport gates, and potentially aircraft, while reducing pressure on budget-fare pricing.
> Network Carriers: Likely to absorb market share in major hubs and benefit from higher average ticket prices, reducing the “budget carrier effect” that forces lower fares.
> Low-Cost Carriers: Likely to inherit Spirit’s customer base and potentially gain access to airport gates and routes previously dominated by Spirit
“Air Canada Scraps Key U.S. Routes Amid High Fuel Prices”
“Air Canada has announced the suspension of several key routes, including major U.S. connections, after jet fuel prices nearly doubled in the wake of the Iran-United States war that kicked off in late February.
“According to Air Canada, all service from Toronto and Montreal to John F. Kennedy International Airport will be suspended starting June 1, 2026, and resume on October 25, 2026, while flights to Salt Lake City and Jacksonville will also be suspended. Air Canada will, however, maintain service to the New York area through LaGuardia and Newark, with approximately 34 daily departures still operating from across Canada.”
“Air Canada joins a growing list of global carriers, including Lufthansa and KLM, that have recently trimmed their schedules to combat skyrocketing operating costs, while carriers like JetBlue (NASDAQ:JBLU), Spirit, and Frontier were already struggling with profitability before the surge. Jet fuel typically accounts for 20% to 30% of an airline’s total operating expenses, making it one of the highest and most volatile costs, often rivaling labor costs. ”
https://oilprice.com/Latest-Energy-News/World-News/Air-Canada-Scraps-Key-US-Routes-Amid-High-Fuel-Prices.html